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Huawei still on hold in spite of US reprieve

The Huawei saga drags on, with the US granting it a second 90-day extension that allows it to keep doing business with US firms

Tue, Aug 20, 2019, 05:27

Huawei is preparing for the worst, announcing a new version of its own operating system last week. Photograph: Getty Images

The Huawei saga continues to drag on, with the US granting it a second 90-day extension that allows it to keep doing business with US companies. On one hand the Chinese company has avoided being slapped with an all-out ban on buying products and services from US companies, but it will be in the same position in another 90 days if nothing is resolved. The threat continues to cast a shadow on the business.

In the meantime customers are – anecdotally at least – wary about buying its smartphones despite Huawei mounting an information campaign to ease their concerns by spelling out what the ban will mean to its phones currently on the market and in the future.

Huawei is obviously preparing for the worst, announcing a new version of its own operating system last week. Whether phone-buyers will want to move away from Google’s products and services to the relatively unknown operating system offered by Huawei remains to be seen.

But that is not Huawei’s only issue at the moment. Far more important to the company is the matter of 5G networks. For years the Chinese company has been building its position in the equipment market, hauling itself into the top three providers in the world.

While the most recent information indicates that Huawei still has a role in the 5G network rollout in Ireland, it won’t be in the core networks. Instead the company will be providing technology in the radio access network, a less sensitive part of the telecoms infrastructure.

Rival Ericsson has scored contracts with both Vodafone and Eir to provide critical infrastructure to the mobile operators.

But the Irish market is relatively small compared to our European counterparts. What would be more concerning for Huawei is if the company was shut out of networks across the continent. That would be good news for Nokia and Ericsson, who both stand to benefit from Huawei’s current uncertainty.

Meanwhile, US president Donald Trump continues to denounce Huawei as a threat to the country’s national security, and says he sees no resolution in sight. Yet that may all change if China and the US can strike a deal on trade.

In the meantime Huawei’s international workforce can do little except wait and see.

A man with a profound understanding of how money is made and lost, Kerry-born economist Richard Cantillon (1680s-1734) is a fitting namesake for this long-running column. Since 2009, Cantillon delivers succinct business comment on the stories behind the news.